Why Can’t We Sell Charity Like We Sell Perfume?

Dan Pallotta‘s shook up the Fundraising/Non Profit world with his book Uncharitable and he is back now with a new book “Charity Case” which is “a blueprint for a brave national leadership movement to change the way the public thinks about charity”

In piece on the Wall Street Journal titled “Why can’t we sell charity like we sell perfume” Dan outlines some of his thinking. I hope that Dan can shake things up a bit and that some of the lazy comments that aren’t thought through by journalists and politicians get less airtime than these well thought through arguments. Below are some highlights from the Wall Street Journal piece, but click here to read the entire article:

Today, Americans are the world’s most generous contributors to philanthropic causes. Each year, we give about 2% of our GDP to nonprofit organizations, nearly twice as much as the U.K., the next closest nation, according to the Chronicle of Philanthropy. Some 65% of all American households with an income of less than $100,000 donate to some type of charity, according to the Center on Philanthropy at Indiana University, as does nearly every household with an income greater than $100,000. These contributions average out to about $732 a year for every man, woman and child in America.

Yet we cling to a puritan approach to how those donations are spent: Self-deprivation is our strategy for social change. The dysfunction at the heart of our approach is neatly captured by our narrow, negative label for the charitable sector: “not-for-profit.”

It’s time to change how society thinks about charity and social reform. The donating public is obsessed with restrictions—nonprofits shouldn’t pay executives too much, or spend a lot on overhead or take risks with donated dollars. The conventional wisdom is that low costs serve the higher good. But this view is killing the ability of nonprofits to make progress against our most pressing problems. Long-term solutions require investment in things that don’t show results in the short term.

He outlines 5 key areas of change:

First, we allow the for-profit sector to pay people competitive wages based on the value they produce. But we have a visceral reaction to the idea of anyone making very much money helping other people. Want to pay someone $5 million to develop a blockbuster videogame filled with violence? Go for it. Want to pay someone a half-million dollars to try to find a cure for pediatric leukemia? You’re considered a parasite.

A second area of discrimination is advertising and marketing. We tell the for-profit sector to spend on advertising until the last dollar no longer produces a penny of value, but we don’t like to see charitable donations spent on ads. We want our money to go directly to the needy—even though money spent on advertising dramatically increases the money available for the needy.

A third disadvantage for charities is the expectation of a home run on every at-bat. If Paramount Pictures makes a $200 million movie that flops, no one calls the attorney general. But if a nonprofit produces a $5 million community fundraising event that doesn’t result in a 70% profit for the cause, its character is called into question. So, naturally, nonprofit leaders tend to avoid daring new fundraising endeavors that might put them at risk.

A fourth problem is the time frame during which nonprofits are supposed to produce results: immediately. Amazon.com went for six years without returning a dime to investors, who stood by the company because they understood its long-term goals. But nonprofits are expected to send every donation immediately to the needy.

Finally, the for-profit sector is allowed to pay investors a financial return to attract their capital. The nonprofit sector, by definition, cannot.

Read the full article in the Wall Street Journal

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